In recent months, the Justice Department and the New York Attorney General’s Office have trumpeted their alleged “crackdown” on Wall Street. JP Morgan Chase, for example, agreed to pay $23 billion in fines in 2013. And Bank of America has recently settled for a $16.7 billion “fine” over mortgage abuses. That’s in addition to a $9.5 billion BoA fine levied by courts in March. (All tax-deductible as “losses,” naturally.)

Of course, being admissions of criminal guilt, you might expect some jail time, too, but I’m not holding my breath on that one, and neither should you. Even so, this proves that our government is impartially enforcing the law, right? After all, this isn’t chump change.
It’s Not About Who Gets Charged … It’s About Who Doesn’t
Not quite. A recent study by the London Business School (LBS) examined more than 7,300 instances when U.S. corporations issued significant corrections to their financial statements between 1996 and 2006. Such restatements typically trigger Security and Exchange Commission (SEC) enforcement actions, because they often imply internal accounting, share trading and other shenanigans.

The LBS study cross-referenced these restatements with campaign contributions and lobbying expenditures by the firms and their executives. It found that “politically connected firms are on average less likely to be involved in an SEC enforcement action, and face lower penalties if they are prosecuted by the SEC.” Specifically, firms that increased their political contributions by $1 million over five years cut their chances of being prosecuted in half.

Why would the supposedly impartial SEC enforce the law so lopsidedly?

The LBS study suggests that it’s all about the SEC’s fear of political consequences when choosing enforcement targets. The more money a firm has donated to key lawmakers, the more likely it is that those lawmakers will become upset by SEC prosecution, leading them to try to punish the agency by reducing its budget. “The presence of an established, public relationship between the firm and key politicians could be sufficient because the SEC might be aware of the increased costs of initiating an investigation against such a firm,” the study says.

A 2013 Project on Government Oversight research report found that since 2001, more than 400 former SEC officials have taken jobs representing firms facing SEC action. The LBS report found that companies that employ ex-SEC lobbyists “experience a larger reduction in the probability of enforcement and in penalties than those that do not.”

Definitely, the SEC has to pick and choose its targets. But surely they’re targeting the worst violations, such as the pay-to-play scandal, in which Wall Street firms bribe state and local politicians to give them pension fund business? After all, the SEC established an unambiguous rule banning Wall Street firms from donating money to politicians who give those firms contracts to manage public pension money.

A major investigation early this year into donors associated with 43 financial firms managing New Jersey pension funds, including vampire squid Goldman Sachs, found that they have spent a total of $11.6 million on contributions to state politicians, including Gov. Christie’s election campaign and the New Jersey Republican State Committee. Many of these contributions came either just before or just after the Christie administration awarded the firms massive pension management contracts.

That’s in direct violation of the SEC rule, but there’s been no mention of an investigation. Indeed, the SEC has prosecuted just one case under the now three-year-old rule.

From 1973 to 2009, the financial sector’s share of domestic corporate profits climbed from 16% to over 40%. Donations flowed to Congress and hundreds of SEC officials became rich shills for Wall Street. So when the U.S. economy’s day of reckoning came in 2007-2008, the only policy options adopted — indeed, the only ones on the table — were those that bailed out America’s fat cat financiers. The rest of us were left to suffer.

END

This is just one example of government corruption. Corruption has spread through our government like a fast growing cancer.

This cancer will destroy the nation and YOUR family.

Are you going to let this happen to the nation our forefathers founded?